When to Bring Your HR In-House

“Should I outsource or hire in?”

As SMBs grow, one challenge these organizations face is deciding when – and how – to formalize their Human Resource departments. As some smaller companies, HR duties may be split among different staff members, including an office admin, who do not have formal HR training or experience. As these businesses expand, however, new considerations arise. In addition to supervising HR essentials like payroll, hiring and onboarding, SMBs need to consider how their HR lead will handle everything from federal regulation compliance to human capital management.

Like any business decision, hiring an HR professional often comes down to money. At SMBs, there is a natural fear that the salary and benefits will eat up a portion of the budget that could be spent on revenue-generating activities. However, a closer assessment finds that a dedicated HR professional may not only save your business money in the long run but also be critical to positioning your business for maximum earning potential.

Are you on the fence about bringing on a full-time HR professional on staff or outsourcing the job responsibilities to a third-party agency? There’s more to HR than paperwork and payroll. From navigating complex compliance requirements to positioning your company for strategic expansion, an in-house professional brings a host of benefits beyond what’s typically available through an outsourcing agency. Keep these considerations in mind as you evaluate your HR options:

Maintain industry and government compliance and avoid costly fees. From health care to employee documentation, the world of federal rules and regulations is evolving rapidly. Keeping up to date with new compliance requirements can be a serious challenge for SMBs that lack a dedicated, onsite HR professional. Unfortunately, despite best intentions, SMBs may inadvertently run afoul of government regulations, risking costly fines or even exposing themselves to potential lawsuits. A full time HR professional will maintain critical industry, employment, and government compliance.

Prepare for future expansion. We’re in the middle of a “talent arms race” and a business as usual approach to hiring won’t land the talent your company needs to grow. From competitive compensation packages to forecasting future talent needs, a dedicated HR professional will help your company lay the groundwork for future expansion initiatives. An experienced HR professional can help your organization identify talent gaps and refine the current hiring process so you invest in the right hires at the right time.

Bring a human capital mindset to current and prospective talent hires. When you bring on a full-time HR professional, you’re bringing on an individual adept at assessing performance, identifying individuals who drive team success, and then empowering these individuals to be even more effective. At SMBs, strategic talent deployment is a productivity force multiplier. When your most talented employees are positioned for success, they lift the entire company up with them.

Don’t get caught in the HR “Catch-22” Without a dedicated HR professional, departments often lack the essential resources and leadership to identify and take action on opportunities for productivity and business performance improvement, stymying growth. That leaves businesses in a Catch-22: companies are reluctant to invest in HR until they have expanded further. But without a strong HR foundation in place, companies are unable to capitalize on time-sensitive growth opportunities, hindering their expansion.

SMBs must keep an eye to the future and proactively bring HR in-house before the need becomes urgent. However, this does not mean your business needs to go broke trying to pay top dollar for a senior HR executive. A strong HR generalist can successfully position your business for growth without adversely impacting your bottom line.